Q&A: Still a mixed bag in the US
What is happening with US property these days? The most recent report from the S&P/Case-Shiller index shows prices in the 20 biggest cities fell 4.1 per cent in July from a year earlier. Activity is picking up, but analysts agree the market probably has not hit bottom.
Are any cities doing well? Other than New York, Washington DC has recorded price increases. The capital always attracts steady interest. In many cities in Middle America, such as Austin, Texas, there were never big increases during the boom years and there have not been big drops in the downturn.
What will it take for the market to improve? Most of the big cities need to work through large inventories of distressed and foreclosed properties. The volume of bank-controlled homes is weighing on prices and has some buyers holding out for bottom basement prices.
It's not cheap to buy a home in New York City these days.
A 980-square-foot apartment in Battery Park is listed as "great value" at US$929,000 (Dh3.4 million). The price goes up to $1.75m for a 1,235-sq-ft apartment near Central Park.
But investors are not waiting for an upturn in the global economy to gobble up property in the Big Apple. The number of condominiums bought in the third quarter rose 17 per cent from a year ago, according to a new report from Miller Samuel, a New York appraiser, and Prudential Douglas Elliman, a broker. The 3,106 sales was the highest volume since the third quarter of 2007, Bloomberg News reports.
Interest is so high, New York has replaced London as the most popular investment market in the world, thanks in part to an increase in domestic activity, Cushman & Wakefield reports.
Investors bought $29.7 billion worth of property in New York in the first eight months of the year, a 166 per cent increase from the same period last year.
London, which has dominated the property investment market in recent years, recorded $27.2bn in sales. The surge was partially fuelled by investors from Asia, South America and Europe taking advantage of a weak dollar, which took some of the sting from the prices. And interest rates remain low.
But while sales are increasing, there has been little change in prices in the past year. Miller Samuel places the median sales price at $911,333, compared with $914,000 in the same period last year.
"You have the luxury market driven by foreign demand, with foreigners finding Manhattan to be a relative bargain," Sofia Song, the vice president of research for StreetEasy, told Bloomberg News. "On the other hand, you have entry-level demand with domestic buyers trying to take advantage of the record-low interest rates."
Jonathan Krangel, 25, told Bloomberg News a one-bedroom, one-and-a-half-bathroom condo he bought in the East Village was "tremendous value" at $859,000.
"People still go out of their way to move to New York to try to make a life for themselves," he said. "You wouldn't say the same thing about the Las Vegases or southern Floridas of the world."
Top 5: Cities for overseas buyers
1 London
2 Paris
3 New York
4 Singapore
5 Beijing
Source: Cushman & Wakefield
The Quote: New York City is a great monument to the power of money and greed. - Frank Lloyd Wright, architect